How Can I Avoid Scams that Target the Elderly?

By Carrie Schwab-Pomerantz

September 12, 2018 8 min read

Dear Carrie: I'm 72, and I've been hearing a lot lately about scams targeting the elderly. I feel like I'm vigilant and have my guard up, but I still worry that I might fall for one of these schemes. How can I protect myself? — A Reader

Dear Reader: I'm glad to hear that you're thinking about how to protect yourself. I've heard so many stories from friends and colleagues about family members becoming victims of this kind of exploitation, and it breaks my heart every time. People work hard to earn their money and accumulate wealth, and it's not right that they're getting cheated out of it.

The number of reported cases is growing and a recent report by the Securities and Exchange Commission estimates that between 2.7 and 6.6 percent of seniors are financially exploited every year. Most people think those numbers are low, but for every case of elder financial exploitation that is documented by authorities, another 44 go unreported. Seniors lose at least $2.9 billion annually from fraud.

This can happen to anyone; it doesn't matter if you're rich or poor, educated or uneducated. We simply become more vulnerable as we age. But you can take steps to help safeguard yourself and your money, and I'll share a few ways for you to do so.

Why You're Vulnerable as You Age

I've heard about "lottery scams" that ask people to make a payment to collect "prizes," as well as "phishing" emails that ask you to provide sensitive financial information. But I've also heard too many stories about older people being deceived by family members or new "love" interests. One friend's niece manipulated her aunt into control of her life savings, and another's father was convinced to rewrite his will, leaving everything to a young woman who stepped in to "help" him.

There are a number of reasons why older people are so susceptible. For starters, many people experience mental and physical challenges as they age, including cognitive impairment and declining health, which means they can become dependent on others or no longer able to manage their own finances. The elderly have also often accumulated wealth and assets over a lifetime, which makes them prime targets for exploitation. And finally, our older population in the U.S. is growing at a faster rate than any other group, which means there are an increasing number of people at risk. With the aging of the baby boomers, an average 10,000 Americans turn 65 every day.

Changing trends in retirement plans also put people at risk. It used to be that most Americans received retirement funds through defined benefit plans — or pension plans — which someone else managed and doled out in small amounts throughout our retirement years. Now, most Americans have a defined contribution plan, such as a 401(k), which they manage themselves. I love 401(k)s, but I also know that people who have them often receive the funds at a time when they may be more susceptible to financial exploitation.

You Can Take Steps Now to Help Protect Your Future Self

Regular readers of my column won't be surprised by what I recommend to safeguard yourself against financial exploitation: Talk with the people you love, as well as a trusted financial adviser, about your finances.

Start by organizing all the information on your accounts, properties, assets and liabilities. Make sure your will is in order, as well as your beneficiary designations and advance care directives.

Then you'll want to identify the people in your life who you think are trustworthy enough to help you if you're no longer able to manage your finances. Such people could be a spouse, children, professional financial adviser or a close friend. You'll want to grant someone power of attorney so that person can act in your place if you become incapacitated or otherwise unable to handle matters on your own. Be sure to talk to your attorney and loved ones about what powers they should have, when the POA goes into effect and how long it will remain in effect. You should review these documents periodically to make sure they still coincide with your wishes.

After you've identified these people, have an honest conversation with them about your finances and your wishes for the future. I know not everyone is comfortable talking about money, but this is really important. I'd recommend setting up a meeting that includes your financial adviser, estate attorney and your children (or other family members) so that everyone is on the same page and knows your wishes. The more people there are who are familiar with your financial situation, the more likely it is that someone will be able to identify financial exploitation.

Various securities regulators are taking steps to help protect seniors and other vulnerable people. In addition, brokers are now required to ask for the name and contact information of a "trusted contact person" when opening new accounts so they can reach out if they suspect potential financial exploitation. In such cases, they can also place a temporary hold on disbursements to help protect investors.

Stay Connected

One of the best ways to help protect yourself from financial exploitation is to stay connected to the people in your life. Scam artists often befriend lonely older people, only to take later advantage of them.

If you are in communication with friends and family, you'll be a less attractive target. Keep in touch with children and siblings and try to spend time with friends. Be especially wary of any new people who enter your life and want to be particularly close or try to separate you from family or lifelong friends. You should be very careful about people you meet on online dating sites.

Speaking Up Can Help Protect You, Too

If you or someone you know is financial exploited, I'd urge you to report it immediately. Many of these crimes go unreported because older people feel ashamed and embarrassed that they were duped. Please don't let that stop you. You can reach out to your local National Adult Protective Services Association, the Federal Trade Commission or the Financial Industry Regulatory Authority's Securities Helpline for Seniors.

Even though this is a growing problem, you can take measures to help protect yourself — and speaking up is an important start. The more we talk about the problem of financial exploitation, the more we can help protect all seniors.

Carrie Schwab-Pomerantz, Certified Financial Planner, is president of the Charles Schwab Foundation and author of "The Charles Schwab Guide to Finances After Fifty." Read more at http://schwab.com/book. You can email Carrie at [email protected] The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. To find out more about Carrie Schwab-Pomerantz and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.

Photo credit: at Pixabay

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